Indian equity markets faced significant selling pressure on January 8, with both benchmark indices extending their losing streak to a fourth consecutive session. Market participants remained cautious amid growing concerns over international trade dynamics and sustained foreign institutional investor outflows.

Market Performance Overview

The trading session on January 8 witnessed sharp declines across major indices, with both Sensex and Nifty 50 closing substantially lower.

Nifty 50 Trading Range

The Nifty 50 experienced significant volatility during the trading session, with the index testing both support and resistance levels throughout the day.

The index opened higher but failed to sustain momentum above the 26,000 psychological level, ultimately closing near the day's low. This price action indicates weakening bullish sentiment and suggests that bears are gaining control of the market direction.

Key Market Pressures

Several factors contributed to the negative market sentiment during the session:

• US Tariff Concerns: Renewed worries about potential US tariff hikes created uncertainty among investors
• Trade Deal Delays: Concerns over delays in finalizing the India-US trade deal added to market anxiety
• FII Selling: Continuous selling pressure from foreign institutional investors restricted any potential market recovery

Technical Analysis

The Nifty 50's decline below the 50-day moving average represents a significant technical development. The index's inability to hold above the 26,000 level, despite opening higher, demonstrates the current weakness in bullish momentum. The closing level of 25,876.85 suggests that bears have successfully defended higher levels and are pushing the index toward lower support zones.

The substantial trading range of 274.75 points indicates high volatility and uncertainty among market participants. The fact that the index closed near its intraday low of 25,858.45 further emphasizes the bearish undertone in the current market environment.

The Nifty 50 extended its decline for the fourth consecutive trading session on January 8, falling decisively below the psychological 26,000 mark amid renewed global uncertainty and persistent selling pressure. The index dropped 264 points (1.01%) to close at 25,877, while the Bank Nifty declined 304 points (0.51%) to 59,686.

Market sentiment remained weak throughout the session, with selling pressure spreading across sectors. Market breadth deteriorated significantly, with approximately 2,470 shares declining compared to only 439 shares that witnessed buying interest on the NSE.

Nifty 50 Technical Analysis

The benchmark index wiped out all gains from the previous week, breaking below key technical levels and confirming a loss of short-term momentum. The Nifty closed beneath its 20-day and 50-day exponential moving averages, with repeated intraday recovery attempts being met with aggressive selling.

Technical experts note that the index is now hovering near crucial confluence support of 25,800-25,850, aligned with the rising trendline and key Fibonacci retracement levels. The formation of a clear lower-high pattern highlights strong supply pressure at higher levels.

Bank Nifty Under Pressure

The banking index approached its critical support zone, testing the 59,500-59,400 level that coincides with the 20 DEMA and 20 SMA. Despite the recent weakness, the Bank Nifty had reached a fresh all-time high of 60,437.35 on January 5 before the current corrective phase began.

Analysts suggest that the banking index's ability to hold above the 59,500-59,400 support zone will be crucial for any potential rebound. A breakdown below this level could widen selling pressure, while holding above it may enable a move toward the 60,100-60,200 resistance zone.

Market Outlook and Trading Strategies

Several factors contributed to the market weakness, including concerns over potential US tariffs and continued foreign investor outflows. Selling pressure was particularly evident in metals, IT, PSU banks, and auto stocks, while only a few counters showed resilience.

For the Nifty 50, experts suggest that as long as the 26,000-26,100 level remains stiff resistance, seller dominance is likely to persist. The next significant support is placed at 25,700, and a decisive break below this level could trigger a move toward 25,600-25,500.

The Bank Nifty remains in a broader uptrend despite the current correction, with the index consistently trading above all major exponential moving averages. The key level to watch for maintaining this uptrend is 58,700, and as long as the index stays above this level, fresh all-time highs remain possible.

Risk Factors and Market Sentiment

Momentum indicators and a rising VIX have signaled caution for bulls, while derivatives data reflects bearish undertones with heavy call writing capping the upside. The current market environment suggests a sell-on-rise strategy may be appropriate in the near term, with traders advised to exercise disciplined risk management.

The market's ability to find stability around current support levels will be crucial for determining whether this represents a temporary correction within the broader trend or the beginning of a more significant decline.